Why We Advise Against The Use Of Cheques As Payment For Our Services? - London Registrars
by Liz Seyi Digital marketing managerOne
of the recent debates among ourselves here at London Registrars concerned the
tendency of some firms solicitors to still send us cheques in payment of
invoices. While these cheques are usually for less than £200, we advise against
clients of our services depending on us always accepting cheques as payment.
The
reasons for this are several: Firstly, our nearest bank branch has been closed
since before the lockdown, and the next branch – over half an hour away in the
City – has not reopened yet following the easing of restrictions. To bank a
cheque is a costly exercise for us as it takes one of our employees the
best part of an hour-and-a-half to bank a cheque.
There
is also, however, the very little-known issue of the law surrounding cheques –
as detailed below.
Cheques
are not legal tender
To
understand our policy against the use of cheques as payment where at all
possible, it is instructive to look back at how they have always been defined.
Ever
since cheques were first introduced, they have not been a promise to pay by the
bank, but instead a request to the bank that it pays a certain amount to a
third party, out of the funds the customer deposits. The Bills of Exchange Act
1882, for instance, defines a cheque as a written order from an account holder,
instructing that their bank pays – on demand – a specified sum of money to one
or more named beneficiaries.
As
a consequence, a bank will only honour a cheque if the account holder has
enough funds to meet it, or if it can be covered by a line of credit such as an
agreed overdraft.
At
no point in their history have cheques ever been legal tender. This means that
if you owe money to someone, they are not obliged to accept a cheque. A
creditor has the right to be paid in legal tender, and can refuse any other
form of payment.
Contact
the London Registrars team about our governance and compliance support
With
our company secretarial solutions encompassing such services as directors’
service addresses, the preparation and submission of the annual Confirmation
Statement, and register
of shareholders maintenance,
we are pleased to cater to a wide range of requirements in relation to
corporate governance, risk and compliance.
Please enquire to us
today for further information about any
of our areas of know-how and experience, either by phone or email to info@london-registrars.co.uk.
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Created on Aug 26th 2021 01:04. Viewed 248 times.
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Aug 26th 2021 02:57